One of the mantra that I am used to repeat endlessly to the Box owners is: “Keep it simple”. It worth for any interaction with clients and in particular when we talk about the pricing and subscriptions schemes. I was many Boxes with a lot of subscription plans and tariffs who usually lead to a huge confusion on both, customers and Box side. There are plans based on the length of the subscriptions that are then crossed with how many times one goes to the gym and sometimes also with, let’s say, accessory services.
It is proven that the more are the possibilities and the less will be the ability of the client to choose what to do. Also, if we give the clients a large choice he almost always select the one that seems to be cheaper in the short time, which means the monthly plan. I have some statistics of real Boxes with real people polled for some time and more than the 50% of the subscriptions, especially in southern Europe, are monthly with two sessions per week.
This may be convenient for the members but it is a nightmare for the owner because a month to month relation, with no locks of the clients is very risky in terms of cash flow forecast because on one side we have fixed costs and on the other we don’t have the certainty of what will be our income month by month. Even being very good at keeping members and create loyalty there are always some external factors that can influence their decision to keep or not their membership and this is not viable in a well planned business.
I don’t want to say that a monthly payment is something to avoid, I am just saying that a monthly plan is to avoid. One good solution also to prevent the seasonal flows of people is a longer plan, typically 6 or 12 months with monthly or bi-monthly payment. In this way the client engage himself with a long term plan at at the same time has the ability to pay small amounts every time. The use of the right app for subscriptions management here is crucial as it can help us to manage the payments with modern tools such as credit cards charge or direct charge to bank account of the clients.
Some may object that the clients may choose to subscribe a long plan only because of the lower price but then not pay their fees. In this case the app is very helpful to prevent them from booking the classes which is a good way not only to limit the number of individuals attending at a class, but also to control their payments status. We made some models simulating various payment plans and duration and in terms of constant flow of money and retention, 6 or 12 months plan with payment quarterly has proven to be the most reliable and viable model. So that’s why in general we suggest this kind of scheme.
Basically we’re talking about two plans with the “open” formula that are easy to explain, to manage, don’t make the client feel limited and are very easy to sell. Of course other schemes can be considered but it depends from many factors that must be evaluated case by case.